Australia axes contested tax on mining revenue

DEAL DONE:The Coalition fulfilled an election pledge in scrapping the tax, while it could also bin plans to dump dredging waste on the Great Barrier Reef

AFP, SYDNEY

Australian Treasurer Joe Hockey, seen here speaking at a press conference on May 13, abolished a contested resources profits tax yesterday.

Photo: AFP

Australia’s upper house yesterday agreed to scrap a contested resources profits tax after the government struck a surprise deal with crossbench senators, including mining billionaire Clive Palmer.

The Minerals Resource Rent Tax was introduced by the previous Labor administration in 2012, with a levy on annual profits above A$75 million (US$70 million) on iron ore and coal at a rate of 30 percent.

It was intended to return a share of the spoils of Australia’s decade-long mining boom to government coffers but was widely criticized after its revenues fell dramatically short of forecasts.

“The mining tax is now gone,” Treasurer Joe Hockey told parliament after the Senate voted 36 to 33 for its repeal, a key election promise of the Coalition, led by Prime Minister Tony Abbott. “We said we’d get rid of the mining tax; we’ve delivered in full.”

Scrapping the tax was made possible after the government did a deal with minor parties led by the Palmer United Party, whose powerbroker leader is a coal magnate.

Palmer always wanted the tax gone, but said he would not support a repeal unless crucial initiatives to assist families — which were threatened by budget cuts — were left unchanged. A compromise was reached.

Greens party leader Christine Milne said the deal was a win for the big miners and for the flamboyant Palmer, who last month issued an apology after outraging Beijing by calling China’s leaders “mongrels” who “shoot their own people.”

“If ever there is a conflict of interest, it is this one,” she told the Senate. “How is it possible that you can have a coal billionaire voting to vote down a mining tax?”

Palmer insisted the move made no difference to his coal mining interests in Queensland, saying he was “retired” and was no longer chairman of any company.

“We all pay tax. Does that mean that members of parliament don’t vote on income tax bills?” he said.

Dumping the tax was a major win for Abbott. It follows his victory in July when he succeeded in abolishing a divisive carbon levy after years of vexed political debate.

Separately, an India-backed mining consortium could shelve controversial plans to dump dredging waste in the Great Barrier Reef, with alternative sites on land being considered amid growing environmental concerns.

Environment Minister Greg Hunt said yesterday there was an “emerging option” that could see the consortium — India’s Adani Group and Australia’s North Queensland Bulk Ports and GVK Hancock — submit a proposal suggesting onshore dumping locations.

“There is an emerging option which I’ve said we’d welcome and consider on its merits,” Hunt told the Australian Broadcasting Corp.

“I can’t put a time frame. It may be a month, it may be less, it may not occur. But we have encouraged and invited (another option).”

The minister’s comments followed a report in The Australian Financial Review that the government-approved marine dumping plan would be abandoned to neutralize controversy over the possible damage it could cause to the World Heritage site.

Conservationists have said the dumping of 3 million cubic meters of material dredged from the seabed as part of a major coal port expansion at Abbot Point — on the Great Barrier Reef coast in Queensland — could hasten the natural wonder’s demise.

The dredging, which was approved in January, will allow freighters to dock at Abbot Point, increasing the coal port’s capacity by 70 percent to make it one of the world’s largest.